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Newly Public Gage Cannabis on a Steep Growth Trajectory

Robin Lefferts

May 11th, 2021

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Investors looking for value in the legal cannabis industry might be looking for some key indicators to point the way to companies of interest. Organizations operating in key and lucrative markets, showing fast revenue growth that looks like it will continue, and having experienced executives to guide the company through the various pitfalls of expansion could be of note. The stories of potentially bright futures based on anticipated production and demand are giving way to the more tried and true question. Who is winning on the ground, right now? And who can sustain success?

Gage Growth Corp. (CSE: GAGE) went public in early April 2021 with a vertically integrated operation in Michigan already in place and expansion plans underway. Gage’s plan involves producing and selling its own premium products across the state while partnering with key brands such as Cookies and Blue River to exclusively bring those award-winning lines to Michigan’s large yet underappreciated legal cannabis market. So far, the company has executed on its ambitious growth plans while Michigan’s sales figures continue to grow to dizzying heights. Backed by Jason Wild, one of the most recognized investors in the cannabis industry, Gage seems to be in the right place at the right time with the right ideas. Let’s take a look.

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Record Financial Performance

Gage reported its full year 2020 financial results at the end of April, and they delivered some eyebrow-raising numbers. 2020 revenues increased 1,972% from 2019, up to $39.9 million. Yes, it is easier to achieve that percentage growth as a young company in a relatively fresh market. No, it is not easy to manage that level of growth and maintain a commitment to quality throughout the organization. While 2020 was a great year for Gage, the real story begins in 2021. The primary focus in 2020 for Gage was to invest in the infrastructure and human capital necessary to build scale and brand. Now, the company is approaching an important inflection point in 2021 to show continued strong growth with critical mass.

Consumer support for the Gage brand is evidenced by the average basket size per person per visit. Statewide, customers spend an average of about $85 each time they purchase from a dispensary. Gage customers far exceed that number, shelling out around $160 on average every time they buy from Gage. The company continues to see that kind of performance in 2021 and is opening more stores to blanket the state with its award-winning retail concept. 2020 numbers are based on five retail locations. Gage recently opened an eighth outlet, and anticipates opening two more locations in May 2021, bringing its total retail footprint to ten. The company’s goal is also having as many as 20 stores operating by the end of 2021.

The goal is for each store to average $1 million in monthly sales, and Gage has been meeting and exceeding that goal over the past two months. The state of Michigan, as a whole, is posting record sales numbers. March 2021 showed $146 million in total retail sales, which would equate to $1.75 billion annually and place the state in the top 3 US markets based on this run rate. As a result of this remarkable growth, both for Gage Cannabis and for Michigan in general, the company is offering stellar revenue guidance for the first two quarters of 2021. Gage anticipates gross revenues in the neighborhood of $17-18 million in Q1, and $26-31 million in Q2.

Gage sees the first half of 2021 exceeding the revenue numbers for all of 2020, and there are more catalysts for growth still ahead for the company. As noted, Gage could have 20 retail locations open by the end of the year, and if the $1 million/month/store metric holds up, the math is pretty easy to figure from there.

Another catalyst could be the unveiling of the company’s own extraction and processing lab, scheduled for Q3 2021. Gage currently enjoys a 50%+ gross margin on its flower products and will be looking to increase that margin on the extract-based products it will be able to create and sell in-house. Extract-based products purchased from third parties generally have low margins, and bringing the whole operation under the Gage roof (the company currently purchases most of its extract-based products from third parties) should significantly increase the margin and only add to the positive economic forecasts.

Gage is simultaneously ramping up cultivation as well. The company has eight facilities currently and is looking to expand that to thirteen by year’s end. Some of these licensed cultivation facilities are owned and operated by Gage, some by contract growers. All plants are grown indoors in small batches using 100% hydroponic methods for sustainable operations. All grow facilities employ proprietary drying, trimming, and curing techniques to deliver a premium end product that commands high market prices and engenders customer loyalty.

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Gage is Coming

The whole model is validated by company performance, which is in turn guided by an expert executive team. Serving as Chairman of the Board, sits Bruce Linton. Mr. Linton is the founder and former CEO of Canopy Growth Corp., having piloted Canada’s largest cannabis company through its tremendous rise through the ranks to its market-leading position. Gage also enjoys the support of noted cannabis and health care investor Jason Wild and his JW Asset Management fund. Gage’s exclusive partnership in Michigan with the preeminent Cookies brand provides further validation of the quality throughout the organization.

But there is no need for potential investors to simply trust these established industry leaders on the qualifications of Gage Cannabis. All they really need to do is watch the results as the company executes on its plans to become the leader in the explosive legal cannabis market in Michigan. It’s happening right before our eyes.

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Disclaimer

The above article is sponsored content. CannabisFN.com and CFN Media, have been hired to create awareness. Please follow the link below to view our full disclosure outlining our compensation: https://cannabisfn.com/legal-disclaimer/

This article was published by CFN Enterprises Inc. (OTCQB: CNFN), owner and operator of CFN Media, the industry’s leading agency and digital financial media network dedicated to the burgeoning CBD and legal cannabis industries. Call +1 (833) 420-CNFN for more information.

About Robin Lefferts

Robin Lefferts has been involved in the legal cannabis industry since 2012, sometimes as an active participant and always as an interested observer.

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CFN Enterprises Inc. (OTCQB: CNFN) owns and operates CFN Media Group, the premier agency and financial media network reaching executives, entrepreneurs and consumers worldwide. Through its proprietary content creation, video library, and distribution via www.CannabisFN.com, CFN has built an extensive database of cannabis interest, assisting many of the world’s largest cannabis firms and CBD brands to build awareness and thrive. For more information, please visit www.cfnenterprisesinc.com.

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